UK home buyers borrowed more money to fund property purchases in the first two months of 2017 than at any point in the past ten years, new figures show.
Research from the Council of Mortgage Lenders (CML) reveals that home buyers borrowed £8.9 billion in February, which is up six per cent on January and two per cent on the same month last year.
In total 48,600 loans were taken out, which is up seven per cent on the month before and two per cent on February 2016.
FTBs driving activity
First-time buyers (FTBs) remain key drivers of activity, taking out £3.8 billion for home-owner house purchase in February, which is up six per cent on the previous month and 12 per cent on February last year. The total of 24,200 loans taken out by FTBs is also up seven per cent month-on-month and 11 per cent year-on-year.
The proportion of household income used to service capital and interest rates continued to be near historic lows, standing at 17.4 per cent for FTBs.
Affordability metrics for FTBs have also seen the typical loan size decrease slightly from £132,300 in January to £132,100 in February, in line with the average household income, which decreased from £40,200 from £40,000.
Existing homeowners continue to form the majority of purchases, with the average amount borrowed by home movers in the UK increasing to £176,000 in February from £175,300 the previous month.
Paul Smee, director general of the CML, said seasonal factors traditionally keep the market quieter in winter months, but 2017 began relatively strongly in terms of house purchases.
“Borrowers took out more loans to purchase a home in the first two months of 2017 than any year since 2007. This is down to strong first-time buyer activity, which has consistently matched home mover borrowing over the past six months; a trend not seen in the UK for 20 years,” he added.
It comes after data published by Halifax indicated that a quarter of first-time buyers in the UK are relying on inheritance money from their parents to get them onto the property ladder.
The research indicated that 25 per cent of 18 to 34-year-olds think they will never own their own home and the same proportion believe they will have to rely on inheritance money from family members to take the first step onto the property ladder.
In spite of this, a range of initiatives exist that can help FTBs to achieve their aspirations of owning their own home, including the Help to Buy scheme and newly launched Lifetime ISAs, which each offer financial assistance over the long term.
For more information on schemes to buy or sell your home, visit www.avanthomes.co.uk/ways-to-buy/.